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Safe pair of hands
Investment-grade bond issuance in the US set another record in 2015 of well over US$1.2trn, driven by massive M&A and share buybacks as companies locked in cheap financing before rates finally begin to rise. For being a leader on some of the biggest of those deals, and navigating massive headwinds at the same time, Bank of America Merrill Lynch is IFR’s US Bond House of the Year.
Medicine goes down
In a year when M&A drove US corporate bond supply to another record, the US$21bn mega-deal backing pharmaceutical giant Actavis’ US$66bn purchase of botox maker Allergan stood out as one of the best on offer for yield-thirsty investors.
Strength, innovation, access
Taking an already strong franchise to the next level is never an easy proposition. Developing one asset class without neglecting another is a balancing act, and growing all at once is a remarkable achievement. But that is what HSBC managed, for which it is IFR’s Euro Bond House of the Year.
Slick timing
French oil major Total decisively cashed in on record cheap funding in March to sell €5bn of subordinated debt, blazing the trail for one the bond market’s hottest trends of the year.
Covering all the bases
As Japanese investors stepped up their search for yield, one house excelled at matching international issuers with local buyers. For its leading role in developing the Samurai and global yen markets, Mitsubishi UFJ Morgan Stanley Securities is IFR’s Yen Bond House of the Year.
Far and wide
In Japan’s notoriously conservative domestic market, selling the first Basel III-compliant Tier 2 bond from a foreign lender was always going to be a delicate process. Dutch-headquartered Rabobank, however, was rewarded for its patience and meticulous planning with a benchmark-sized Samurai issue that paved the way for others to follow.
Domestically global
In their attempts to offer a global suite of products to their clients, some banks run the risk of neglecting their domestic heritage. HSBC not only avoided this but managed to use its universal outlook to underpin its domestic achievements. HSBC is IFR’s Sterling Bond House of the Year.
Leading the way
Santander UK navigated a notoriously tricky market to land the UK’s first Additional Tier 1 bond with an aggressive structure that could see the bonds written off permanently, reopening the dormant European AT1 market in the process.
Scaling the Matterhorn
For holding its nerve in a truly challenging year, accurately sensing the direction of the winds of change and even increasing its lead in a difficult market, Credit Suisse is IFR’s Swiss Franc Bond House of the Year.
Enter the iSwissie
Apple made its debut in the Swiss franc market less than a month after the SNB dropped its FX bombshell in mid-January, reiterating the relevance of the franc market that had been unsettled by the recent shock.
Watershed moment
UBS has fought hard to make its FIG franchise one of the best in the business. For its market leadership in a year shaped by volatility and regulatory evolution, UBS is IFR’s Europe Financial Bond House of the Year.
Breaking new ground
UBS executed a multi-tranche, multi-currency Additional Tier 1 trade that brought innovation to a maturing market and represented a key milestone for a bank that once came close to collapse.
All figured out
Financial institutions are under continued pressure to raise capital due to tougher new regulations, and when they need to turn to the bond markets, they often turn to Citigroup. The bank delivered smooth execution even when a borrower’s particular needs took a deal into uncharted territory. Citigroup is IFR’s North America Financial Bond House of the Year.
Fruit punch
You can call it a peach of a deal – in fact they did. Voya Financial sold US$500m of pre-capitalised trust securities in March, calling the 10-year note offering Peachtree Corners Funding Trust, in honour of the famous street running through Atlanta, home of the insurer.
Seizing the day
Several peripheral sovereigns have seen their debt levels soar to unprecedented levels in recent times as a consequence of a series of debt crises in 2010 and 2011. Even though the latest crisis itself has subsided for most, those countries still have to find a way of managing the proliferation of short-term debt over a remarkably short period of time.
Steady hand
Covered bonds proved to be one of the most reliable funding tools for banks in 2015, but a volatile backdrop and market distortion meant there was no shortage of obstacles to navigate. For its initiative, flexibility and global reach, HSBC is IFR’s Covered Bond House of the Year.
Breaking the mould
DBS heralded Singapore’s long-awaited arrival in the covered bond market with a deal that opened up an alternative funding channel for the city-state’s banks and paved the way for further supply from rival institutions.
Taking responsibility
Socially responsible investment expanded decisively into fixed income in 2015, with the emergence of sustainability bonds adding to more established products such as climate bonds. For its role in such developments and because it continued to be a key stakeholder in the sector’s corporate governance, Credit Agricole is IFR’s SRI Bond House of the Year.
Best practice
ABN AMRO’s debut Green bond not only set a great example for best practice in terms of transparency, auditing and certification, but also enjoyed high-quality deal execution during difficult market conditions.
Getting ahead
For bringing the full sweep of issuers to market in both good times and bad, while avoiding the pitfalls that befell others, Deutsche Bank is IFR’s Europe High-Yield Bond House of the Year.
PIK of the bunch
Peripheral European banks’ need to sell down non-core operations has presented an unmissable opportunity for private equity firms. But working out how to finance these assets in the capital markets is easier said than done and, for buyers, funding costs are a key driver of valuations.
Brave leader
For guiding issuers through times of extraordinary volatility in the leveraged finance market, for stepping up its game against competitors by deploying its balance sheet when most needed by issuers, and for delivering strong execution across industry sectors, Goldman Sachs is IFR’s North America High-Yield Bond House of the Year.
Natural instinct
PetSmart defied sceptics on all fronts in 2015 as it sailed through market wobbles and regulatory curbs on leveraged lending to price the largest LBO bond of the year.
Back in 1992, IFR’s Duncan Balsbaugh got a ringside seat from his position on Morgan Stanley’s London trading desk to watch George Soros’s attack on sterling. They say you can’t fight central banks, but as Soros showed, you can – and you should!
A plunge in commodity prices has left many energy exploration and production companies locked out of markets and struggling to refinance. Some are starting to get creative in an effort to ensure continued funding for their ongoing businesses.
Guidelines issued by the Fed, designed to limit leverage and reduce systemic risk, have made it harder for banks to compete in the leveraged lending business in the US. But while the leaders in the business have lost market share this year, lending remains healthy, with those borrowers looking for leverage able to find other options.
The central banks were once Olympian gods but have descended to be among men, and in doing so have lost many of their powers.
Low interest rates and rising equity valuations, and an investor base desperate for paper, drove an increase in exchangeable bond issuance in 2015. Corporates hesitated to issue bonds convertible into their own stock but leapt at the chance to use large cross-holdings for cheap financing.
The privatisation plan Narendra Modi touted when he came to power in India 18 months ago has failed to take off quite as the pro-business premier promised. Doubts over his reform agenda are mounting, but are they justified?
If 2015’s banking narrative was supposed to centre on a defensive strategy re-think, replete with slashed assets and diminished headcount, no one told Japan’s ambitious commercial mega-banks.
The dramatic rout that followed the latest bull run in China’s equity markets was a case of history repeating itself. Regulators are still grappling to understand the root cause, but they must realise there is only one solution – and it’s surprisingly simple.
Fast-growing companies seeking to build confidence in their business models and raise financing are increasingly turning towards private fundraising rounds. So far, the trend has been limited but it could become to IPOs what Uber is to public transport.
Securitisation has come a long way since the dark days of the financial crisis, when politicians – and many regulators – laid the blame for much of the chaos squarely at its feet. With both groups now broadly understanding the role it can play in stimulating lending, securitisation is on the march again, with a new and novel type of loan being considered for use in the asset pool.